Shares of SouthGobi Resources Ltd fell more than 17 percent on Tuesday, a
day after China”s Chalco said it had dropped its $926 million takeover bid for
the Mongolia-focused Canadian coal miner in the face of political opposition.

The state-controlled Chinese aluminum giant
blamed the failure of the deal on the difficulty of gaining regulatory
approval. SouthGobi”s stock tumbled 17.8 percent to C$2.21 on the Toronto Stock
Exchange on Tuesday morning.

The coal miner”s shares have fallen more than
70 percent since April, when the Chalco deal was announced.

Chalco”s offer, worth C$8.48 a share for a
controlling stake, was backed by SouthGobi”s majority shareholder, Turquoise
Hill Resources, but faced political opposition within Mongolia, which is fast
growing wary of increased Chinese presence in its mining sector.

The proposed deal was the trigger for a law
passed in May that limits foreign ownership in Mongolia to 49 percent for
companies in strategic sectors, including mining.

SouthGobi, which owns large coal projects
close to the border of energy-hungry China, saw its second-quarter profit
plunge after Mongolia suspended SouthGobi”s mining license following Chalco”s
bid.

Turquoise Hill holds a 58 percent stake in
the coal producer, while China Investment Corp owns 14 percent.

Reuters